30 N.J. Eq. 618 | New York Court of Chancery | 1879
The bill iu this cause was filed for the foreclosure of a mortgage upon certain lands in the city of Trenton, executed by John L. Taylor and wife, to the trustees for the support of free schools, to secure a loan of $5,000, with interest, of the moneys belonging to the state school fund, which mortgage is dated April 23d, 1861. The bill states, also, that on April 15th, 1867, Taylor and wfife executed another mortgage, on the same premises, to the chancellor of the state of New Jersey, to secure a loan of $5,413.33, with interest, and that The Inhabitants of the City of Trenton claim some interest in the same premises, by virtue of an assessment of taxes thereon, made by said city in 1875, under the provisions of its charter, approved March 19th, 1874, and its supplements, and a sale of the premises for the payment of
The cause was referred to a master of the court, in due course, who has reported that both the mortgage of the trustees and that of the chancellor are prior encumbrances on the mortgaged lands to the said tax liens, and to this report as to priorities the city has excepted, and claims that the said assessments of taxes for the years 1875, 1876 and 1877 are each and all, by force of the charter of 1874, prior liens on the premises to both of said mortgages.
These liens, and the priorities thereof, are claimed by the city by virtue of sections 55, 58, 59, 60, 61, 66, 71, 72 and 73 of its charter (P. L. 1874, p. 331), and section 4 of the supplement (P. L. 1874, p. 527); it is clear, I think, that the legislature intended by this charter that all taxes assessed in this city to an owner of a lot in respect of such lot, should be assessed both in personam and in rem; and, so far as such assessment should be in rem, that it should be upon and
This charter is a special act passed before the adoption of the amendments to the constitution; it confers upon the city invidious and special privileges and powers which are not given to the other municipalities of the state; all mortgages upon lands within the city boundaries are to be assessed there as included in the land, and no deduction on account of such mortgages is allowed, whilst elsewhere in the state a deduction is allowed, and in such case the mortgage interest is to be assessed to the mortgagee; the lien of the assessment made by the city is to be established upon the estate and interest of both the mortgagor and of a mortgagee under a mortgage given before the assessment is made, whilst elsewhere the estate and interest of such prior mortgagee are to be free from the lien of a subsequent assessment. Morrow v. Dows, 1 Stew. 459. In respect both to the subjects of assessment, and to the extent of the lien therefor, important powers and privileges not accorded to other municipalities are, by this special act, conferred upon the city of Trenton. The twelfth paragraph of the constitutional amendments was intended to abolish all such special privileges, and the effect of its adoption on September 28th, 1875, was to repeal from thenceforth the sections of the charter conferring them. State v. Newark, 10 Vr. 380; Montgomery v. Trenton, 11 Vr. 89. As the assessments for
The assessment of 1875 remains; it was made, and the lien thereof attached, as early as the last Monday in June, 1875 (P. L. 1874, p. 527, § 41), by force of the charter, and before the adoption of the constitutional amendments, and is unaffected by the repeal of the sections above mentioned.
The effect of this assessment in respect to the mortgage to the trustees is first to be considered. Although this mortgage was executed to the trustees for the support of free schools, yet they were merely public agents of the state in' the transaction, and the mortgage is the property of the state, dedicated by the constitution to the special trusts of education. State v. Trenton, 11 Vr. 89. The first inquiry must be, whether the language of the charter of 1874 was intended to subject the estate, or any interest of the state in lands in Trenton, to assessment for taxes, or to any lien therefor. General terms only are used in the charter; the lien is given “ notwithstanding any devise, descent or alienation ” of the land, “ or any judgment, mortgage or encumbrance thereon ” (§ 61 of Charter), and the purchaser at a tax sale is to hold the land “against the owner or owners thereof, and all persons claiming under him or them ” (§ 73 of Charter). It is clear that in both the sections the legislature had in view persons only, natural and artificial, as the devisees, alienees, descendants, judgment creditors, and mortgagees, whose property might be assessed, or affected by the lien of an assessment of taxes. The power to assess state property, or to affect its interests by the lien of an
In point of fact, it is impossible for the legislature to clothe a municipality with the power of taxing state property. Taxation is in its essence an exercise of sovereign power over an inferior; it is an exaction, payment of which, by the inferior, is compelled by thé superior. Commonwealth v. Morrison, 2 A. K. Marsh. 524, 536. The municipality, a mere creature, cannot "be vested with any compulsory powers over its creator. If the state permits any part of its property to be taken for municipal purposes, such permission is a voluntary appropriation made by the state, and not taxation by the municipality. To an appropriation of the securities of the school fund, either for general state purposes or for municipal purposes, there is a complete constitutional bar; the fund is expressly dedicated by t-he constitution to the support of free schools, and the legislature is prohibited by that instrument from borrowing, appropriating or using the fund for any other purpose, under any pretence whatever. Constitution, Article 4, § 7, Subdiv. C.
It is contended on the part of the city, indeed, that this tax is not levied on state property; that the land only is assessed, and that the mortgage, being mere personalty, and not an estate in land, is not assessed, and that the charter merely postpones the lien of the mortgage to the lien of the assessment. If it be admitted that the mortgage is mere personalty, still no legislative machinery can be construed whereby any security belonging to the school fund can be lawfully impaired. The lien of the mortgage is the constituent element of its value, and as much the property of the school fund as the mortgage itself, and the legislature has-no power to waive or postpone such lien in favor of
As to the mortgage made to the chancellor, it is admitted that it is not the property of the present or any former incumbent of that office, but is an investment of funds in the custody of the court of chancery of this state, which custody was acquired in the due exercise of its functions. Money in court is money in the possession of the state, acting through its judicial and ministerial officers, and such possession is acquired by the exercise of the sovereign power of the state, under the direction of its courts. The state, through its courts, lays its hands forcibly upon money or upon property, which it converts into money, and not admitting a present right of property or possession in any claimant, holds the legal title thereto in itself, for the benefit of whomsoever it may at a future day determine, through its courts, to be entitled to it, in whole or in part, according to the law of the land. If such a beneficiary be found, the state will vest its legal title in him ; if none be found, the title will remain vested in the state. Pending such ascertainments, the fund is the property of the state. The particular securities in question—a bond and mortgage to the chancellor—are the usual badges of legal ownership in the state. If there be any person in esse or in posse beneficially entitled to the fund secured by them, as to such person the
If, then, the charter of the city had specifically authorized the bond and mortgage to the chancellor to be assessed, or its lien to be impaired while held by him, such authorization would have been a violation of the principles of constitutional government, and void. But there is no such specific authority, either in this charter or in any law of the state-Courts, judges and their officers are not persons contemplated by the tax laws. Matter of Kellenger, 9 Paige 62. If the legal title to the mortgage in question is in the state, through its chancellor, general words in a tax law will not affect it. People v. Doe, supra. If there are beneficiaries enjoying any interest in the fund secured by the mortgage, they must be assessed in respect thereof. The condition of this mortgage, also, had been broken before the assessment of 1875; but, as has been before said, whatever was the quality of the mortgagee’s interest in the land, it was included in the assessment of the land under the provisions
The chancellor is respectfully advised that the exceptions be overruled.